Why Harvard must divest from carbon companies: A student’s open letter

I’ve been writing recently about the need to embark on a Zero Carbon economy; and to implement it in time, how we also need a radically fast (Manhattan Project–fast) energy rationing regime.

As I argued here, this is the only way to stave off the twin downsides of the current “Keep David Koch Happy” energy policy — an increasingly large number of large spill disasters, and the long Thelma and Louise ride out of the Holocene, the age of civilized man.

I present this information only to identify the goal. It’s almost always true that, if you don’t identify the goal, you can never arrive at it, even if the goal is in reach. In this case, the goal is not even close to “in reach,” but still, identifying the goal is critical to any forward movement, and we must make forward movement. (To put this in business terms, as the guy who wrote The Seven Habits of Highly Effective People, a big-deal business book of a recent generation, put it — it doesn’t matter how fast you climb the ladder, if it’s the wrong ladder.)

Now I want to start looking at how to get there, how to achieve the goal. We have a number of options. The first, and a very effective one, is a national divestment campaign. This is modeled on the divestment campaign that helped end apartheid in South Africa.

Divestment campaigns look like this: Identify the issue (in the case of South Africa, brutal and racist state policies). Then use the morals of that issue to pressure major institutions such as mutual funds, college endowment funds and the like — shame them, in other words — into selling (“divesting” themselves of) all stock in any company invested in that industry.

Divesting from the Carbon Industry

Here’s one that’s already started. Hate Big Carbon? Get people to sell carbon stocks. As I said, the process has already started, but I want to present to you one very effective piece, and also present the way divestment campaigns work.

This is a Harvard graduate, writing an open letter (and quoted in The Nation) to the Harvard president, challenging the president’s morals. Always effective, a challenge from students. After all, as I hear it, a challenge from students finally got the Notre Dame administration — yes, priests, men of god — to stop using sweatshop labor to produce ND-branded shirts. (The priests, bless their hearts, got the message, once someone other than their own consciences passed it to them. Who knew that would work?)

I’m going to skip the introduction (but please do read it) and include just a fair amount of the letter, but not all. After you’re done, think — is there a way you can do this? Again, Nation writer Wen Stephenson‘s introduction is at the click. Here’s the student letter(my emphasis):

March 19, 2014

Benjamin Franta
Gordon McKay Lab
9 Oxford St.
Cambridge, MA 02138

Dear President Faust,

I am writing to you today in the hope of generating a public discussion that is based on intellectual honesty and moral seriousness.

I will be direct in this letter. It does not imply a lack of respect. I believe it is best to work together, and the need for clarity is urgent.

Last month you and I met to discuss Harvard’s divestment from the fossil fuel business. We disagree on whether or not Harvard should continue to invest in fossil fuel corporations, but I am not concerned by disagreement per se. I am concerned by the possibility that you are not treating this issue with the honesty and seriousness that it deserves. I believe that possibility has troubling implications. …

To justify the university’s continued funding of the fossil fuel industry, you have provided a list of unsubstantiated beliefs in place of evidence-based arguments, both in your written statement on fossil fuel divestment and in subsequent conversations. Unsubstantiated beliefs will not suffice to protect our children and grandchildren from damages arising from planetary climate change.

The plan you have put forth as an alternative to divestment—that Harvard, through a strategy of shareholder activism, will induce fossil fuel companies to become clean energy companies—is a proposition that requires evidence to demonstrate its seriousness and feasibility. I am not aware of evidence to suggest that: 1) fossil fuel companies have any interest in becoming clean energy companies anytime soon, if ever; 2) that it is possible for such companies to become clean energy companies while maintaining fiduciary responsibility to their shareholders; 3) that shareholder activism is capable of inducing such fundamental shifts in business strategy; or 4) that Harvard, as an activist shareholder, has such power. …

The same need for evidence applies to your statement that divesting from fossil fuel companies will cause a significant loss of revenue for the University. This may very well be true, but, again, evidence to support that conclusion is needed. Various studies to date have indicated that divestment from fossil fuel companies need not result in significant financial losses. Do these studies not apply to Harvard’s endowment, in full or in part? Are there other losses of revenue that concern you besides investment returns, such as corporate and private donations? Or are your concerns less tangible? …

Other statements of yours indicate, to my mind, a lack of seriousness that is troubling, such as your suggestion to me during our last meeting that if Harvard divests from fossil fuels, the University will need to decide whether to divest from sugar. Surely you understand that fossil fuels and sugar are distinct in a number of fundamental ways. …

When carbon dioxide is put into the atmosphere, it requires 25-50 years to cause the bulk of its warming effect, which then affects every living thing on the globe. Thus, when we use fossil fuels today, our children and grandchildren bear damages as a result (along with everyone else’s children and grandchildren). These future damages are large, they are accumulating and they are unpaid for. Fossil fuel companies are particularly profitable today because no one is paying for these damages. None of these facts are secrets. Through investing in fossil fuels, Harvard seeks to profit, and does profit, from these future damages. …

In refusing to divest, Harvard is choosing to profit from future damages that create intergenerational and geographical inequity. This unnecessarily positions the endowment in conflict with the future welfare of our children and grandchildren. It is this status quo—not some hypothetical scenario—that is cause for offense and leads many to demand change. … Some of your arguments appear to be inconsistent with each other, and this concerns me because inconsistency can indicate a preference for convenience over the truth. …

If you have evidence to support the feasibility of your plan to change fossil fuel companies to clean energy companies, you must present it. And if you have evidence to support your assertion that divestment, even partial divestment, will significantly hurt the University financially, you must present it. And if you are going to use “slippery slope” and self-consistency arguments as reasons for inaction on a problem that will affect all of our descendants, then you must make those arguments more clearly.

Those calling for divestment have the right to do so, because the profit motive to exacerbate climate change at the expense of others—an activity that Harvard is now engaging in and endorsing—affects the welfare of their children, grandchildren and the generations that come after them. …

Sincerely,

Benjamin Franta

And that’s how it’s done. Click to see the whole letter. Are you a Harvard grad? You can write the president as well. Are you an any-college grad? Feel free; you can write to your own college president. You don’t need permission to act. (And if you do follow up, let us know in the comments how it went. I guarantee you’ll at least hear back.)

Share This Post

I found the lobbying colleges to divest themselves of oil equities interesting. Several years ago I read an article the subject of which was California’s Socially Responsible Investing policy and it’s adverse impact on the state’s Pension Fund, CalPERS. Screening generally excludes those investment avenues and companies whose policies and practices are considered harmful for the social environment. Generally companies involved in manufacture and sales of products like tobacco, alcohol, gambling, and arms and ammunition, are filtered out in socially responsible investing.

Now it is axiomatic that whatever California’s policies are on all things environmental, renewable energy and pension fund management will be 180 degrees out of phase with reality. Having converted my 401(k) plan to a self directed account I invested in some tobacco stocks. Good Move. Finally I’m of the opinion the Socially Responsible Investing is, by definition, irresponsible.

alpha2actual

I suggest you review the Renewable Energy Index which follows the big players in the renewable rent seeking scam. REINXX. It’s in the tank, to the tune of -98% suckers. Do your ETF/Mutual fund renewable energy filter. They are all in the tank and they all have 3 factors in common. Anemic net asset value, low trading volume, and they are all in the TANK. I have a better idea let’s start a fund that captures firms that are into Socially Responsible Conduct, oh wait, that’s not an original idea, it’s been done and those funds are in the TANK.

alpha2actual

The health and uninterrupted functioning of international Fossil Fuel Markets determines the totality of life on this planet. That is the natural order of things today. That is the atomic and subatomic and galactic structure of things today! There is no America. There is no democracy. There is only Exxon Mobil, and Chevron, and BP, and Royal Dutch Shell, Peabody Energy, and BHP Billiton . Those are the nations of the world today. We no longer live in a world of nations and ideologies. The world is a college of corporations, inexorably determined by the immutable bylaws of business. The world is a business, it has been since man crawled out of the slime. And our children will live, to see that… perfect world… in which there’s no war or famine, oppression or brutality, no Anthropogenic Climate Change. Only one vast and ecumenical holding company of fossil fuel conglomerates, for whom all men will work to serve a common profit, in which all men will hold a share of stock. All necessities provided, all anxieties tranquilized, all boredom amused, all IPhone GPS tracking disabled.

GeorgeMokray

From the International Energy Agency’s World Energy Outlook 2012 Executive Summary:
“No more than one-third of proven reserves of fossil fuels can be consumed prior to 2050 if the world is to achieve the 2ºC goal, unless carbon capture and storage (CCS) technology is widely deployed.”

This is becoming known as the carbon bubble, the idea that fossil fuel companies like Exxon-Mobil, Shell, BP are wildly over-valued and their stocks are bound to collapse.

To my knowledge, this is not a significant argument in the divestment movement and most definitely should be. You can confront institutions like Harvard on their fiduciary responsibility and force them to re-evaluate their stock holdings in light of the economic realities of climate change.

We are in the battle of our lives

We must fight back, and we CAN win this. But it will take hard work and time. I am already making preparations for a wide-ranging campaign to fight Trump's Cabinet appointees and supreme court nominations. As part of that effort, when my lease is up in NYC, I will be moving back to Washington, DC, to take the fight directly to Donald Trump.

Won't you please support my work with a generous donation? And then, follow me on Twitter and Facebook, where I do a lot of micro-blogging in addition to here on AMERICAblog.